Housing Stock Transfer - Essay Example

1 Appraisal of housing stock transfer (with regard to tenants) The social housing sector in England is in a crisis. The council housing stock transfer from local authorities to Registered Social Landlords (RSLs) is primarily meant to improve the social housing conditions and provide quality housing services to tenants. The Labour Government had undertaken the transfer drive on a massive scale. The office of the Deputy Prime Minister is in direct charge of the affairs relating to the stock transfer. As the Government has planned to upgrade the quality of all council homes by 2010, the councils are in a hurry to do away with their ownership of the homes and relieve themselves of what they consider as the troublesome and nagging responsibilities. The RSLs are independent, not-for-profit housing organisations registered with the Housing Corporation under the Housing Act 1996 (A tenant's guide). Generally council homes are owned and operated by local council authorities. Thanks to their poor financial condition and inability to maintain these homes, the Government has in principle decided to transfer the housing stock and hand them over to RSLs. Under the transfer, these council homes would become the property of RSLs. Certainly, the idea receives appreciation from all quarters as the transfer of housing stock is meant to improve housing standards and satisfy the tenants. But the Government has simply forgotten that it has been leaving the most important sector- social housing- to the whims and fancies of the market forces. It is a pity that the Government has never thought that the RSLs 2 would play with the tenants the same way as the market forces do in a consumer market. It is most unfortunate that what actually resulted from the stock transfer policy was entirely different from what actually the Government thought. LSVT transfers The housing stock transfer programme began operating in 1988 under the Large Scale Voluntary Transfer programme (LSVT) which is still in vogue. The stock transfer activity intensified between September 1996 and March 2000 through another programme called Estates Renewal Challenge Fund (ERCF) initiative (Summary, point 1). This initiative was mainly focused in areas where poor housing conditions were prevalent like the Greater London area containing mostly council housing. Of course, stock transfers under ERCF tool place at other places too. Administrative actions and Government programmes are aimed at improving working conditions and providing healthy services for the people. In this case, most of the local councils continued with the policy of housing stock transfer with a view to protecting the tenants. But going by what has been happening in this field, it seems that the tenants are being made scapegoats and forced to pay a heavy price because of the lopsided stock transfer policy. A survey conducted in six locations - Angus, Edinburgh, Inverclyde, North Lanarkshire, Perth & Kinross and Stirling -has revealed that the majority of RSLs have been charging separately for mainstream services such as landscaping, door entry systems, stair lighting, stair cleaning and other special services. It has come to light that in some cases, the charges for these services equal the rental charges and in 3 some cases are going beyond the rentals. But, under the council housing system, these service and maintenance charges are debited to the Housing Revenue Account (HRA) to which contributions are made by all the tenants in a particular area. (Introduction, 5.2 and 5.5). The disadvantage The disadvantage for tenants in the RSL housing system is that the tenants are treated independently and separately for the expenses part and the gullible tenants have been transformed into powerful sources of regular income for these housing companies and associations. The very important point of 'social concern', one of the predominant factors in council housing policy, is conspicuously missing after the stock transfers. RSLs, operating with a business motto, have been ignoring the community cause. The problem is that the private housing companies have not been asked to keep the general welfare issue in mind while deciding rents and other charges. It has resulted in the exploitation of the tenants by the housing companies to fill their coffers after the housing stock transfer has come into operation. According to the tenants' guide published by the Office of the Deputy Prime Minister (ODPM), before stock transfer, the council tenants are protected by the Acts of Parliament in their capacity as secure tenants. But, after the stock transfer, the tenants would first come under the purview of tenancy agreement in their capacity as assured tenants and next by the Acts of Parliament (A tenant's guide). This clearly indicates that the RSL tenants are subject to the tenancy agreements more which can be violated by the RSL bosses. The guide also says that the housing services 4 provided by the housing associations would be independently scrutinised by the Housing Inspectorate to ensure that they deliver best value and focus on tenants' needs. But no where it is parituclarly mentioned that the rents charged by RSLs would be evaluated by the Inspectorate specifically. The guide also mentions that tenants could continue to stay in the RSL houses as long as they abide by the tenancy agreements indicating the moment they violate the agreements, they will be asked to vacate. But the guide is conspicuously absent on what would happen to the RSLs in case they violate the agreements. Tenants' argument Against this background, the main argument of tenants is that these stock transfers have been threatening their rights and causing undue sufferings to them. Tenants have protested and alleged several times that the RSLs have been functioning in a less democratic manner, collecting higher rents and subjecting them to frequent evictions. Their grouse is that the council housing stock transfer to RSLs is tantamount to total privatisation. It is quite natural for the private sector, controlled by the banks and the building societies, to protect its self interests and neglect the cause of the tenants pushing the priority social sector of housing into a consumerist market. Under stock transfer policies, RSLs are entitled to pump in their private funds to buy and renovate some or all homes of a local council / authority. Under ERCF, these organisations are also entitled to procure grants from the Government in case they buy homes with negative 5 values. The total number of homes in the country owned by local council authorities is around 4.2 million. Out of these, 143 local authorities had handed over a total of 7, 38, 000 homes to private housing companies through 180 stock transfer orders. These stock transfers, relating to 18 per cent of the total available council homes, were exercised in a period of 15 years after the launching of the LSVT programme. (Summary, point 2) More evictions under RSLs As already pointed out, under council housing, tenants are protected with secure tenancies. But under RSL system, their secure tenancies are replaced with less secure 'assured' tenancies making evictions easier. Under council housing, evictions were 2 in every 1000 homes while the figure rose sharply to 3.7 in every 1000 homes managed by housing associations in 2 years from 2000 to 2001 recording a 64 % rise in evictions. RSLs are extensively resorting to the use of a controversial rule 'Ground 8'to continue with evictions. This rule vests automatic powers on RSLs to evict tenants from their homes at their will and pleasure. Obviously this rule cannot be enforced in case of council tenants. A survey of 116 RSLs by National Housing Federation revealed that 16.5 % of their evictions resulted from this controversial rule. When it comes to rents, RSL rents are higher at 17% than those of council rents and it is seemingly getting difficult to contain the difference. They undertake to give rent guarantee for a period of 5 years after taking over the stock but in most of 6 the cases, it is established that the RSLs have been systematically violating the guarantee during the period. It is a pity that the tenants are made to pay the high cost of repairs and borrowings in shape of rents and other services charges. RSLs borrow money from private finance companies, banks and building societies at higher interest rates than councils to keep the homes in good condition and are obviously transferring the financial burden to the tenants. (More Evictions, Higher Rents and Worse Services). RSLs also pay heavily to their maintenance staff increasing their total expenditure by leaps and bounds. The above are the main reasons why LA (Local Authority) housing tenants have been refusing to move to RSL housing. As the average difference between LA and RSL rents has been constantly growing, resistance to the house stock transfer policy has also been growing at a rapid speed. In fact, there was widespread opposition in 2002 and 2003 to the stock transfer policy of the Government. The stock transfer policy is linked to the council tenants' approval. When a vote is conducted on the proposed transfer of housing stock of a local authority, majority of the council tenants have to say 'yes' or 'no' declaring their acceptance or denial to the transfer. But, due to the bitter experiences of tenants under RSL housing, majority of council tenants are saying 'no' to the new stock transfers in new cases. Publicity drive Councils have been spending lot of money on publicity drive for creating awareness about the stock transfer benefits. In spite of this large scale wastage of money on publicity, council tenants 7 are not coming forward to accept the stock transfers. As per the reports prevailing in the first quarter of 2004, residents of 35 councils have rejected the stock transfer proposals for various reasons explained above. The most authoritative and spectacular rejection of the Government's proposal to stock transfer took place in the Birmingham, the country's largest council. Dismayed at the tenants' growing opposition to stock transfer, Government had come up with two alternative proposals expecting that the tenants would fall for one of them. The backdoor privatisation One of the alternatives, known as the Private Finance Initiative (PFI) was aimed at improving the homes over a period of 30 years by a private sector consortium. The other alternative was aimed at establishing Arms Length Management Organisations (ALMOs) for running the day to day affairs of the homes independently from the control of councils that would however continue to wield ownership of their homes. Camden council tenants rejected the stock transfer proposal twice: first they declared a vehement 'no' to the transfer to RSLs and then followed it up with another 'no' to the transfer to an ALMO. The most surprising part of this entire exercise was that the Government had promised a grant of 283 million to the ALMO in case it won the vote in its favour. People thought that it was an attempt to bribe the tenants indirectly and rejected the vote. The grand finale to this vote had appeared in the tenants' demand later on that the Government must grant those promised funds to the Camden council for improving the homes (Government dismay). 8 The Government faced the most embarrassing situation on the issue of stock transfer in Kingston council when the tenants had rejected the stock transfer vote with 63 % majority in 2004 for the second time, the first rejection being recorded in 1994. The rejection rate was much higher in urban areas. Out of a total of 8 transfers in London, only three transfers have been cleared by the voters. The second vote by Kingston council came under severe criticism from several organisations. In May 2004, a committee of MPs criticized that in the backdrop of the decent homes pledge, the Government has been blackmailing the council tenants into accepting one of the three options (Matt Weaver). Government's role In the stock transfer affairs, the ODPM is directly involved up to certain extent only but the impression carried is that that the Central Government has been fully and practically monitoring the entire things from A to Z which is not the case any way. The Government has however succeeded in propagandising that housing sector is one of its priorities. It is true but the priority is to finish the housing stock transfer as soon as possible. In practice, the entire transaction takes place at the behest of local authorities. Local councils are advised to prepare the transfer schemes, initiate a dialogue with RSLs and ALMOs, work out the complete details and submit the scheme details to the ODPM for final approval. After obtaining the approval from the ODPM, the councils would negotiate with the tenants and conduct a vote on the transfer. These 9 guidelines were clearly mentioned in the February 2003 policy paper known as 'Sustainable Communities: building for the future'. In this paper, the Government had fully committed itself to bringing all council housing up to the Decent Homes Standard by 2010. Through this paper, the Government had asked the councils to choose the most suitable option from the PFI, ALMOs and the stock transfers (Housing stock transfer, introduction). This policy paper reveals that the Government is committed to privatise the social housing sector either by hook or crook. The reasons are very clear. The Government wants to take out a major headache from the administrative responsibility of the councils which have been lacking in sufficient funds for the maintenance of their homes. But tenants are unable to comprehend the logic behind the transfer policy. The renovation of council homes certainly requires large funds. But, instead of handing them over to private companies, the Government itself can mobilise funds from various sources and ask the councils to run them properly after renovation. The issue lies with fund mobilisation and it does not matter whoever spends the money as long as the funds are properly utilised. The advantage with the council management is that policies can be framed based on the welfare concept and the disadvantage with the RSLs is that the policies are framed with self interest as the goal. This is the basic difference between the two. After all, the main objectives of any Government are nothing but the welfare of the people. Can anyone deny this 10 Betrayal of tenants By September 2004, it was clear that the Government introduced the alternative schemes of PFI and ALMOs to backstab the council tenants. Under the ALMOs programme, it was assured that the councils would continue to enjoy the ownership rights of their homes. This made the tenants think that their special privileges as council tenants would continue to be protected. But to the surprise of all tenants, a new proposal had come from the ODPM in September 2004 disclosing that all the Alms would inherit as early as 2006 the ownership rights of the homes run by them (John Martin ). It is true that the Government has set a target itself that all council homes must be brought up to their basic Decent Homes Standard (DHS) by the year 2010. A decent home is described as one having effective insulation and efficient heating to contain reasonably warm temperature and having reasonably modern facilities such as a bath room and kitchen. The home should also be in a reasonable condition to undertake repairs whenever necessary (Decent Homes Standard & Stock Options Appraisal).Those opposing the sotck transfer have been correctly arguing that the Government itself can also undertake the required repairs and enhance the status of council homes to bring them on par with DHS. 11 References: A tenant's guide, Who is the new landlord and how are they accountable Housing stock transfer. Retrieved November 8, 2005, fromhttp://www.onlineroadshow.co.uk/images/odpm_house_025664.pdf Summary, Improving social housing through transfer. Report by the comptroller and auditor general.HC 496 session 2002-2003:19 March 2003. Retrieved November 8,2005, from http://www.nao.org.uk/publications/nao_reports/02-03/0203496es.pdf Introduction, Chapter five rents patterns at the local scale. Determined differences: Rent structures in Scottish social housing. Retrieved November 8, 2005, from http://www.scotland.gov.uk/library5/housing/ddrs-07.asp A tenant's guide, what are your rights after transfer Retrieved November 8,2005, fromhttp://www.onlineroadshow.co.uk/images/odpm_house_025664.pdf Summary, Point 2. Improving social housing through transfer. Report by the comptroller and auditor general.HC 496 session 2002-2003:19 March 2003. Retrieved November 8,2005, from http://www.nao.org.uk/publications/nao_reports/02-03/0203496es.pdf More Evictions, Higher Rents and Worse Services, The case against transfer. Retrieved November 8, 2005, from http://www.defendcouncilhousing.org.uk/dch/resources/dch_Conf2004InitialPapers.pdf#search='higher%20rents%20under%20RSL%20housing' Government dismay, on the home front. Resistance anarchist bulletin. Issue 58 Feb. 2004. Retrieved November 8,2005, from http://www.indymedia.org.uk/media/2004/02/285229.pdf#search='higher%20rents%20under%20RSL%20housing' Matt Weaver, tenants reject homes transfer for second time, May 19, 2004, Housing transfers. Retrieved November 8, 2005, from http://society.guardian.co.uk/housingtransfers/story/0,8150,1220198,00.html Housing stock transfer. Retrieved November8, 2005, from http://www.odpm.gov.uk/index.aspid=1152480#P31_1709 12 John Martin, Council housing transfer plans 'betray' tenants, September 3, 2004, Housing transfers. Retrieved November 8,2995, from http://society.guardian.co.uk/housingtransfers/story/0,8150,1296791,00.html Decent Homes Standard & Stock Options Appraisal, Stock options appraisal.Retrieved Novembver9,2005, from http://www.reading.gov.uk/housingandbenefits/counciltenants/General.aspid=SX9452-A78028D8 Read More